Show SEES INFLATION A SLOW PROCESS A real danger for the future col ayres tells banking groups 1 NEW BRUNSWICK N J present prospects do not indicate that inflation severe enough to cause further dollar devaluation will come soon la in this country but as an ultimate develop ment it seems to be a very real dan ger leonard P ayres vice president cleveland trust company said here tonight in an address before the grad aate school of banking he believed this statement to be true unless the government enters frankly upon a pot ley of issuing flat money with which to meet its expenses at present that does not seem to be in sight he said the graduate school to if operated jointly by the american institute of banking section of the american bankers association and rutgers rutger university to offer advanced studies for bank officers we have so enormously increased the capacity of our banking system tor for credit expansion that it Is difficult to see ee how bow we could have a vigorous business revival without having it develop into a credit inflation colonel ayres declared inflation a slow process it inflation does doe come it will be a slow groces no he said pointing out that in germany france belgium and italy it took about live five years to develop from the time when the governments en upon policies of financing large peacetime peace time deficits deficit by bank credit up to the time when the public generally began to spend money rapidly because of fear ear that it would still further de preci ate in purchasing power if we are to go through such A period here it would seem likely that it night might last rather longer than the corresponding periods did abroad he be said its begia beginning ning would date from the spring of 1933 when we left the old gold basis tor for our money and entered upon the policy of financing large governmental deficits by the sale of federal securities mainly to banks rather than to private investors investor the method that we are following la is the one that proved disastrous in europe tor for in all those countries including germany the increasing issues issue of money that caused the inflation lations were not mere printing press presa issues of flat currency but were secured by government bonds and notes discounted at the banks nevertheless the process is inherently a slow one among the clearest lessons taught by the european experience colonel ayres asserted is that there are no good hedges against inflation he added did not lighten debt burda one of the strange facts about those these lations Is that while they destroyed de stroyd the values of most existing debts they did not succeed in lightening the debt burdens of either the people as a whole or of the corporations inflation destroys destroy the value ot of bonds bond and mortgages and so 0 o confiscates confiscate the th property of these holders holder of obligations and hands hand it over to the shareholders and the equity owners however it introduces so many new economic difficulties that these share shara and equity holders are at once forced to incur new indebtedness ednes so ao that when stabilization comes the problems problem of debt are about as troublesome as a they were before or even evan more so 0 o the five requisites of inflation were listed by colonel ayres as first a pe p of sustained active business so second a rising stock market third real credit expansion fourth greater outflow of gold than we can tolerate which would force us to cut our currency entirely tree free from gold and fifth continued large budget deficits in ration |